Copper market after the holiday speculation
The LME copper fell $19.5 to close at $8005 on Friday and gained at $431 a week.
In the classical technical analysis, this week's rise has played an important role in breaking through the symmetrical triangle. In the case of Lun Cuong, the swing range of the Great Triangle is 6636-8280 US dollars; from the breakthrough point of 7750 US dollars, the theoretical goal of rising is 9394 US dollars.
However, such a goal may become a reality? Let us analyze from multiple dimensions.
1, from a technical point of view:
In addition to the symmetric triangle breakthrough, the monthly KD indicator of the LME copper turned upwards, indicating a greater probability of rising in the coming months. The monthly KD indicator is generally more stable and accurate.
The daily KD value is at 80 highs and there is resistance at the upside (8,280 U.S. dollars), so there is a need for adjustment. It can be expected that in the last trading week before the Spring Festival next week, Lonco may have adjusted (deepest at 7780 US dollars); but this is only to prepare for the rise, or in the second half of the week will show the impulse to rise again.
In addition, from the 40-day moving average, taking a flat for more than a month, there are signs of heading upwards.
2, from the market structure:
Since New Year's Day, the price difference between Shanghai copper futures contracts has changed significantly. It changed the “bear market structure†that was high and low before the end of last year, and now it has evolved into a “positive basis difference†with a very low level. The main contract 1204 is higher than the 1202 contract by 600 yuan/ton. This reflects a fundamental change in overall sentiment - a good forecast for the future. In addition, Shanghai Copper's position is at a high level and it has picked up slightly (450,000 contracts).
Spot signs of improvement, quotes continue to hold firm. Shanghai copper quoted at 56850-57300 yuan / ton on Friday, up 750 yuan / ton, premium 150 - premium 50 yuan / ton. Perhaps the narrowing of the discounted price on Friday is related to the delivery date, but we have noticed that the narrowing of discounted premiums is a recent feature, indicating that traders are no longer pessimistic and reluctant to sell their goods, even though the pre-holiday downstream procurement is scarce.
From the comparison between Shanghai Copper and London Copper, it is now 7.27. The low parity shows that the domestic economy is still pessimistic, and international speculators are obviously more optimistic; at the same time, it is not conducive to late imports. There are two ways to correct the price of the price, or the price of London Copper fell, or Shanghai Copper to keep up. It depends on the domestic consumption after the holiday.
3, from the inventory evolution:
LME copper stocks continued to decline in recent months, 135.6 million tons on the 13th, cancellation of warehouse receipts up to 18.5%, and the spot premium narrowed to 9.5 US dollars; Shanghai Stock Exchange stocks on the Shanghai Stock Exchange increased, the week increased 15,000 tons To 12 million tons (not high). Changes in stocks and changes reflect international tensions. In the future, there will be demand for stocks in Europe. In contrast, domestic supplies are relatively loose (some imports are converted into stocks), and pre-holiday spending is weak. From this point of view, it is not difficult to understand why the reason for the lower price of Shanghai and London is.
Inventories reflect the most intuitive indicators of supply and demand at this stage. The supply and demand of copper market is generally tight and tight. The increase in the cancellation of warehouse receipts by Lonco indicates that the LME copper stocks will continue to decrease; this gives Renmin Copper support. However, Shanghai copper stocks are not conducive to the upside. To say good, it is caused by weak consumption before the holiday and consumption will rebound after the holiday. To the poor, the real demand is bad and imported copper cannot be well digested; then, there will be downside risks to the price of copper in the future.
4, from the import demand:
Since the second half of last year, domestic imports of copper and copper have accelerated; this is indeed different from previous years. According to customs data, China’s imports of copper and copper in December totaled 508,000 tons, a year-on-year increase of 47.7% and a year-on-year increase of 12.6%, setting a record for single month imports. In 2011, the cumulative imports totaled 4.0734 million tons, an overall decrease of 5.10%. In this case, there are three reasons for the huge amount of procurement: First, the price is relatively low; Second, the supply of scrap copper has been tight; Third, the end of the year financing copper imports, long-term centralized procurement, production equipment and other libraries.
This unexpected increase obviously provided strong support for Lun Copper; however, due to “indigestion†in China, it will obviously increase the supply pressure in the later period. The important question is: Will the import volume continue in the first quarter? It is not easy to answer now, but what is certain is that China pays attention to “a year of development lies in the spring†and that post-holiday production and sales will increase, and thus imports will remain high, but it will fall back. At the same time, this also lays a foundation for the future market decline.
5, from the fluctuation season:
According to the law of the trend in previous years, around the Spring Festival, copper prices tend to be biased upward. Today, the performance of Lunhu and Shanghai shows this characteristic. Near the Spring Festival, there was a certain stocking demand in the domestic spot market, but it was light compared to previous years. It can be said that this is closely related to the pessimistic overall situation last year.
However, has the sharp drop in prices fully reflected these? If it is, then when the external conditions improve, the rebound becomes inevitable; conversely, if the conditions deteriorate, the rise of the rise will be suppressed.
6, from the global macro situation:
China: In December, CPI increased by 4.1% year-on-year, which has dropped for five consecutive months. The control of inflation provides room for a reduction in the RRR. It can be determined that the credit environment will be relatively loose in the first quarter.
United States: The housing market has bottomed out and employment has improved, indicating that the economy is entering a steady recovery track. The strong performance of the US dollar has recently reflected this point. The strong dollar cycle has already arrived, which is generally not conducive to the upward trend of copper prices; however, the economic upturn will also support the copper prices stage by stage, showing that the dollar will also increase copper prices (a long-term reverse). In terms of the US dollar, the index has strong resistance at 81.8, and at the same time, the weekly KD value is at overbought area (80). Therefore, the US dollar may usher in an adjustment period. In this way, a rising time window opens for the product.
Europe: On the 13th, S&P cut the credit ratings of nine countries in the euro zone; the most notable is the reduction of the French rating from the highest AAA to AA+. Here, there are two points to be reminded: First, Standard & Poor's has only lowered one grade in France, eliminating the worry of two previous downgrades; secondly, the market has already reflected before the announcement last night; and the market has been in the early stage. In this fear.
Therefore, we believe that the adjustment of the French rating is a bad run and that the market may oscillate in the short term; but what is more significant is that the European debt crisis has ushered in a period of relative ease, despite the fact that Italy’s debt expires in March and March.
[Market evaluation]
We have looked at the market from six dimensions. Although the length and internal and external contradictions still exist, improvement before and after the Spring Festival is a trend, and it also determines the conditions for the gradual rise of copper prices.
In short, the price of copper may oscillate next week, but then it will rise. The first target is at 8,500 US dollars, and the second target, or at 9,200 US dollars, will last until around March.
In the classical technical analysis, this week's rise has played an important role in breaking through the symmetrical triangle. In the case of Lun Cuong, the swing range of the Great Triangle is 6636-8280 US dollars; from the breakthrough point of 7750 US dollars, the theoretical goal of rising is 9394 US dollars.
However, such a goal may become a reality? Let us analyze from multiple dimensions.
1, from a technical point of view:
In addition to the symmetric triangle breakthrough, the monthly KD indicator of the LME copper turned upwards, indicating a greater probability of rising in the coming months. The monthly KD indicator is generally more stable and accurate.
The daily KD value is at 80 highs and there is resistance at the upside (8,280 U.S. dollars), so there is a need for adjustment. It can be expected that in the last trading week before the Spring Festival next week, Lonco may have adjusted (deepest at 7780 US dollars); but this is only to prepare for the rise, or in the second half of the week will show the impulse to rise again.
In addition, from the 40-day moving average, taking a flat for more than a month, there are signs of heading upwards.
2, from the market structure:
Since New Year's Day, the price difference between Shanghai copper futures contracts has changed significantly. It changed the “bear market structure†that was high and low before the end of last year, and now it has evolved into a “positive basis difference†with a very low level. The main contract 1204 is higher than the 1202 contract by 600 yuan/ton. This reflects a fundamental change in overall sentiment - a good forecast for the future. In addition, Shanghai Copper's position is at a high level and it has picked up slightly (450,000 contracts).
Spot signs of improvement, quotes continue to hold firm. Shanghai copper quoted at 56850-57300 yuan / ton on Friday, up 750 yuan / ton, premium 150 - premium 50 yuan / ton. Perhaps the narrowing of the discounted price on Friday is related to the delivery date, but we have noticed that the narrowing of discounted premiums is a recent feature, indicating that traders are no longer pessimistic and reluctant to sell their goods, even though the pre-holiday downstream procurement is scarce.
From the comparison between Shanghai Copper and London Copper, it is now 7.27. The low parity shows that the domestic economy is still pessimistic, and international speculators are obviously more optimistic; at the same time, it is not conducive to late imports. There are two ways to correct the price of the price, or the price of London Copper fell, or Shanghai Copper to keep up. It depends on the domestic consumption after the holiday.
3, from the inventory evolution:
LME copper stocks continued to decline in recent months, 135.6 million tons on the 13th, cancellation of warehouse receipts up to 18.5%, and the spot premium narrowed to 9.5 US dollars; Shanghai Stock Exchange stocks on the Shanghai Stock Exchange increased, the week increased 15,000 tons To 12 million tons (not high). Changes in stocks and changes reflect international tensions. In the future, there will be demand for stocks in Europe. In contrast, domestic supplies are relatively loose (some imports are converted into stocks), and pre-holiday spending is weak. From this point of view, it is not difficult to understand why the reason for the lower price of Shanghai and London is.
Inventories reflect the most intuitive indicators of supply and demand at this stage. The supply and demand of copper market is generally tight and tight. The increase in the cancellation of warehouse receipts by Lonco indicates that the LME copper stocks will continue to decrease; this gives Renmin Copper support. However, Shanghai copper stocks are not conducive to the upside. To say good, it is caused by weak consumption before the holiday and consumption will rebound after the holiday. To the poor, the real demand is bad and imported copper cannot be well digested; then, there will be downside risks to the price of copper in the future.
4, from the import demand:
Since the second half of last year, domestic imports of copper and copper have accelerated; this is indeed different from previous years. According to customs data, China’s imports of copper and copper in December totaled 508,000 tons, a year-on-year increase of 47.7% and a year-on-year increase of 12.6%, setting a record for single month imports. In 2011, the cumulative imports totaled 4.0734 million tons, an overall decrease of 5.10%. In this case, there are three reasons for the huge amount of procurement: First, the price is relatively low; Second, the supply of scrap copper has been tight; Third, the end of the year financing copper imports, long-term centralized procurement, production equipment and other libraries.
This unexpected increase obviously provided strong support for Lun Copper; however, due to “indigestion†in China, it will obviously increase the supply pressure in the later period. The important question is: Will the import volume continue in the first quarter? It is not easy to answer now, but what is certain is that China pays attention to “a year of development lies in the spring†and that post-holiday production and sales will increase, and thus imports will remain high, but it will fall back. At the same time, this also lays a foundation for the future market decline.
5, from the fluctuation season:
According to the law of the trend in previous years, around the Spring Festival, copper prices tend to be biased upward. Today, the performance of Lunhu and Shanghai shows this characteristic. Near the Spring Festival, there was a certain stocking demand in the domestic spot market, but it was light compared to previous years. It can be said that this is closely related to the pessimistic overall situation last year.
However, has the sharp drop in prices fully reflected these? If it is, then when the external conditions improve, the rebound becomes inevitable; conversely, if the conditions deteriorate, the rise of the rise will be suppressed.
6, from the global macro situation:
China: In December, CPI increased by 4.1% year-on-year, which has dropped for five consecutive months. The control of inflation provides room for a reduction in the RRR. It can be determined that the credit environment will be relatively loose in the first quarter.
United States: The housing market has bottomed out and employment has improved, indicating that the economy is entering a steady recovery track. The strong performance of the US dollar has recently reflected this point. The strong dollar cycle has already arrived, which is generally not conducive to the upward trend of copper prices; however, the economic upturn will also support the copper prices stage by stage, showing that the dollar will also increase copper prices (a long-term reverse). In terms of the US dollar, the index has strong resistance at 81.8, and at the same time, the weekly KD value is at overbought area (80). Therefore, the US dollar may usher in an adjustment period. In this way, a rising time window opens for the product.
Europe: On the 13th, S&P cut the credit ratings of nine countries in the euro zone; the most notable is the reduction of the French rating from the highest AAA to AA+. Here, there are two points to be reminded: First, Standard & Poor's has only lowered one grade in France, eliminating the worry of two previous downgrades; secondly, the market has already reflected before the announcement last night; and the market has been in the early stage. In this fear.
Therefore, we believe that the adjustment of the French rating is a bad run and that the market may oscillate in the short term; but what is more significant is that the European debt crisis has ushered in a period of relative ease, despite the fact that Italy’s debt expires in March and March.
[Market evaluation]
We have looked at the market from six dimensions. Although the length and internal and external contradictions still exist, improvement before and after the Spring Festival is a trend, and it also determines the conditions for the gradual rise of copper prices.
In short, the price of copper may oscillate next week, but then it will rise. The first target is at 8,500 US dollars, and the second target, or at 9,200 US dollars, will last until around March.
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